they took place over a five-month period and toward a single end -- diversion of settlement proceeds away from plaintiff). Moreover, the only party injured by this scheme was Davis Chemical. Thus, insofar as the allegations of para. 16 are excluded from consideration, the complaint establishes no more than the paradigmatic one-scheme, one-victim scenario which the Seventh Circuit has repeatedly held to fail the pattern requirement of RICO. See, e.g., New Burnham Prairie Homes, 910 F.2d at 1478-79; Jones, 845 F.2d at 755; Morgan, 804 F.2d at 976.
Plaintiff's reliance upon Liquid Air Corp. v. Rogers, 834 F.2d 1297, 1304-05 (7th Cir. 1987), cert. denied, 492 U.S. 917, 109 S. Ct. 3241, 106 L. Ed. 2d 588 (1989), is unavailing. In Liquid Air, the court acknowledged that a single-scheme, single-victim scenario may satisfy the pattern requirement where the particular predicate acts alleged represent distinct, repeated injuries inflicted upon the plaintiff. Accord Appley v. West, 832 F.2d 1021, 1028 (7th Cir. 1987).
However, Liquid Air and Appley establish only a narrow exception to the substantial line of cases holding that a single scheme which involves a single victim does not qualify as a pattern of racketeering, Jones, 845 F.2d at 755, and the facts which plaintiff has alleged do not fit within that exception. Each of the predicate acts which plaintiff has alleged relates to the defendant's alleged efforts to obtain a sample of REX-121A, analyze its contents, develop a product mimicking its formula, and patent the result. To this extent, the predicate acts alleged establish what amounts to a single injury, the misappropriation of Davis Chemical's trade secret. Therefore, unlike the predicate acts of racketeering alleged in Liquid Air and Appley, the predicate acts here do not give rise to distinct injuries. See SK Hand Tool Corp. v. Dresser Industries, Inc., 852 F.2d 936, 943 (7th Cir. 1988), cert. denied, 492 U.S. 918, 109 S. Ct. 3241, 106 L. Ed. 2d 589 (1989) (Liquid Air inapplicable where each predicate act did not cause separate harm to plaintiff).
Plaintiff urges the Court to look beyond the alleged misappropriation to the subsequent sales of Nalco's alkylation additive. However, none of the predicate acts which plaintiff has alleged with any particularity concern such sales, and it is these predicate acts alone to which the Court must look in determining whether a pattern of racketeering has been established. See Balabanos v. North American Investment Group, Ltd., supra, 684 F. Supp. at 507. Paragraphs 13 and 15(C) of the complaint refer to the sales of Nalco's alkylation additive and certain mailings routinely made in connection with them; yet, assuming that plaintiff intended these references to establish separate predicate offenses of mail fraud, the allegations have not been set forth with the particularity required by Rule 9(b). See § IV(A)(1)(b), supra.
Moreover, although Nalco's sales of the alkylation derivative are certainly relevant to the question of damages, they are insufficient to demonstrate the pattern of repeated wrongdoing and resulting harm which RICO requires. The Seventh Circuit's opinion in Management Computer Services, Inc. v. Hawkins, Ash, Baptie & Co., supra ("MCS"), lends particular support to this conclusion. In that case, the plaintiff, MCS, had sold a mini-computer to the defendant, HABCO, and prepared software for use on that computer. When it installed the computer, MCS stored back-up copies of the software on the HABCO's premises. These copies included programs which MCS had prepared under contract specifically for the HABCO as well as other non-contract programs belonging to MCS. HABCO later duplicated the back-up copies and allegedly used several of the contract programs, in addition to MCS' non-contract programs, to develop new software both for HABCO's own internal use and for the use of its clients. In addition, MCS alleged that HABCO sold or licensed the use of unauthorized copies of the contract programs to the same types of clients which MCS served. The district court granted summary judgment in favor of HABCO on MCS' RICO claim, finding that MCS had failed to come forward with adequate proof of a pattern of racketeering activity. On appeal, the Seventh Circuit affirmed, rejecting MCS' argument that HABCO had committed a predicate act of racketeering each time it made use of the allegedly stolen software:
If, as MCS alleged, the contract software at issue was proprietary to MCS, then when HABCO first copied that software it in essence stole the software. HABCO's subsequent use of the allegedly stolen software cannot be characterized as subsequent thefts. When a thief steals $ 100, the law does not hold him to a new theft each time he spends one of those dollars. The same is true of the back-up tapes. Indeed, the copying of the back-up tapes might be characterized as the first allegedly unauthorized copying of both the non-contract and the contract software. If so characterized, then at that point HABCO had stolen all of the software. Its subsequent and varied uses of the stolen software would not constitute new offenses but would go only to the issue of damages. This is simply not a case that involves long-term criminal conduct or activity that could, in common-sense, be called a pattern of racketeering.
883 F.2d at 51 (emphasis in original). MCS precludes plaintiff from characterizing sales of the alkylation additive which Nalco allegedly derived from REX-121 as further predicate acts of racketeering. For purposes of the RICO analysis, the wrong against Davis Chemical was complete once defendants procured a sample of REX-121A and copied the formula. Nalco may continue to reap sales from this alleged scheme which Davis Chemical, in turn, loses; but to the extent Davis Chemical suffers ongoing effects of this ilk, they relate solely to the question of damages and do not suffice to meet the pattern requirement of RICO.
b. The course of conduct with respect to other competitors
Plaintiff alternatively maintains that defendants' alleged misappropriation of the formula for REX-121A, taken in conjunction with comparable wrongs which Nalco has allegedly committed against other competitors, suffices to establish a pattern of racketeering activity. As noted, para. 16 of the complaint alleges that Nalco has, in a number of instances over the past ten years, obtained product samples from its other competitors and used the information gleaned from these samples in the development of its own products, in much the same way that it obtained the sample of REX-121A and used the information it acquired from that sample to develop its alkylation additive. Plaintiff thus reads the complaint to establish that the racketeering activity in which defendants allegedly engaged vis a vis Davis Chemical constitutes Nalco's regular way of doing business, and that the complaint therefore meets the pattern requirement. See Northwestern Bell, 109 S. Ct. at 2092 ("the threat of continuity may be established by showing that the predicate acts or offenses are part of an ongoing entity's regular way of doing business"). Accepting the allegations as true, the complaint may establish that covert product sampling constitutes Nalco's modus operandi.
Nonetheless, the complaint fails to satisfy the pattern requirement because it does not establish that racketeering activity constitutes Nalco's regular way of doing business.
Although para. 16 alleges a course of conduct which is similar to the alleged misappropriation of Davis Chemical's formula for REX-121A, this other conduct is outlined in only the most general terms, and certainly not with enough particularity to establish that Nalco has committed other racketeering offenses. In John v. Phelps, 713 F. Supp. 1161, 1166 (N.D. Ill. 1989), Judge Norgle held that predicate acts committed in furtherance of a single scheme to defraud could not be transformed into a pattern of racketeering by reference to comparable allegations of fraud against the defendants in two other lawsuits. He observed that the predicate acts of fraud must be alleged with particularity, and concluded that the plaintiff's general reference to conduct at issue in other litigation was simply insufficient to allege a specific act of racketeering. Id. The same reasoning applies here. Paragraph 16 does not purport on its face to state an offense of mail fraud, wire fraud, interstate transportation of stolen property in interstate commerce, or any other crime which qualifies as a predicate act of racketeering. At the same time, the facts alleged in this paragraph do not support the inference that such an offense was committed. Plaintiff does not suggest, for example, that Nalco ever carried stolen product samples across state lines, or used the mails or telephone in execution of a scheme to defraud its other competitors. Accordingly, para. 16 does not supply additional facts sufficient to support the claim that Nalco has routinely conducted its business through racketeering activity.
B. Section 1962(a)
Plaintiff has also asserted that each of the defendants is liable under § 1962(a). (Complaint, para. 18.) In relevant part, this section provides:
It shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity . . . to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce.